Applied Industrial Technologies, Inc. · NYSE:AIT
Applied Industrial Technologies — Q1 2024 Earnings Presentation
17 slides from Applied Industrial Technologies's earnings presentation, Oct 26, 2023
Slide 1: Fiscal Q1 2024 Recap
Fiscal Q1 2024 Recap October 26, 2023 - The Premier Provider of Advanced Motion, Power, Control, & Automation Solutions to Critical Industrial Infrastructure -
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains statements that are forward-looking, as that term is defined by the Securities and Exchange Commission in its rules, regulations and releases. Applied intends that such forward-looking statements be subject to the safe harbors created thereby. Forward
Slide 3: Primary Messages from Management
Primary Messages from Management • Delivered solid earnings growth with EBITDA and EPS up 12% and 21% YoY, respectively, and exceeding expectations; reflects strong execution, ongoing margin improvement, and operational discipline. • Moderating sales growth in line with our expectations as customer
Slide 4: Fiscal Q1 2024 Key Financial Highlights
Fiscal Q1 2024 Key Financial Highlights Sales, $ in millions • Sales up 3.1% YoY o Up 3.4% on an organic daily basis +3.1% $1,095 3.4% Org/Day o Acquisitions +1.1%, currency +0.2%, selling days -1.6% $1,062 • Net income of $93.8M and EPS of $2.39 Q1 2023 Q1 2024 o EPS up 21.3% from the prior year o
Slide 5: Organic Sales Growth Trend and Investor Discussion Points
Organic Sales Growth Trend and Investor Discussion Points Year-over-Year Organic % Change in Sales Per Day F1Q24 Sales Growth Detail • Up 3.4% YoY on an organic daily basis; in line with expectations and against difficult comparisons • Up 23% on a 2-year stack basis, 39% on a 3-year stack basis 21.1
Slide 6: Other Investor Discussion Points
Other Investor Discussion Points Discussion Point Update Detail Normalizing end-market demand balanced by secular Influenced by our technical industry position, more diversified growth including indirect exposure to infrastructure end-market mix, ongoing automation buildout, and sales force Growth T
Slide 7: Segment Results – Service Center Based Distribution
Segment Results – Service Center Based Distribution Segment Overview: Representing 67% of fiscal 2023 sales - the segment Service Center Distribution Segment Sales, in Millions includes our core distribution operations including ~400 local service centers across North America, Australia, and New Zea
Slide 8: Segment Results – Engineered Solutions
Segment Results – Engineered Solutions Segment Overview: Representing 33% of fiscal 2023 sales - the segment Engineered Solutions Segment Sales, in Millions consists of 1) our Fluid Power network specializing in distributing, engineering, designing, integrating, and repairing hydraulic and pneumatic
Slide 9: Fiscal Q1 2024 Margin and Expense Highlights
Fiscal Q1 2024 Margin and Expense Highlights Gross Profit, SD&A, and EBITDA Metrics • Gross margin up 81 bps YoY LIFO $ in millions Q1 24 Q1 23 Chg YoY Impact YoY o Includes a favorable 41 bps YoY impact due to LIFO o Price actions, channel execution, effective freight management, and ongoing margin
Slide 10: Cash Flow and Balance Sheet
Cash Flow and Balance Sheet Free Cash Flow (in Millions) - Fiscal 1Q Period • F1Q24 cash from operations of $66.2M; free cash of $61.9M $78.2 o Free cash at 66% of net income in the quarter, and up 203% YoY o Free cash of $359M for the 12 months ending Sept 30, 2023; ~100% of net income $61.9 o YoY
Slide 11: Fiscal 2024 Guidance and Outlook Assumptions
Fiscal 2024 Guidance and Outlook Assumptions Fiscal 2024 Guidance Updated Considerations: • Organic daily sales growth of 0% to 3% excluding ~100 bps Prior Current contribution from acquisitions and foreign currency translation (8/10/23) (10/26/23) • Moderating industrial activity through the year r
Slide 12: Number of Selling Days by Fiscal Quarter and Full Year
Appendix: Number of Selling Days by Fiscal Quarter and Full Year Fiscal Period Q1 Q2 Q3 Q4 Year 2022 64.0 61.0 64.0 63.5 252.5 2023 64.0 61.0 64.0 63.5 252.5 2024 63.0 61.0 63.5 64.0 251.5 12
Slide 13: Net Sales and Operating Income by Segment
Appendix: Net Sales and Operating Income by Segment Three Months Ended Sept 30 (dollar amount in thousands) Q1 FY23 Q1 FY24 Service Center Based Distribution Segment: Net sales $ 717,988 $ 746,533 Operating income $ 88,809 $ 96,881 Egineered Solutions Segment: Net sales $ 344,417 $ 348,655 Operating
Slide 14: Reconciliation of EBITDA
Appendix: Reconciliation of EBITDA Three Months Ended Sept 30 (dollar amount in thousands) Q1 FY23 Q1 FY24 Net Income $ 76,880 $ 93,826 Interest expense, net 6,480 1,320 Income tax expense 22,164 25,103 Depreciation and amortization of property 5,481 5,717 Amortization of intangibles 7,705 7,393 EBI
Slide 15: Reconciliation of EBITDA Margin
Appendix: Reconciliation of EBITDA Margin Three Months Ended Sept 30 (dollar amount in thousands) Q1 FY23 Q1 FY24 Net Sales $ 1,062,405 $ 1,095,188 EBITDA 118,710 133,359 EBITDA Margin 11.2% 12.2% 15
Slide 16: Reconciliation of Free Cash Flow
Appendix: Reconciliation of Free Cash Flow Three Months Ended September 30 (dollar amount in thousands) Q1 FY18 Q1 FY19 Q1 FY20 Q1 FY21 Q1 FY22 Q1 FY23 Q1 FY24 Cash provided by Operating Activities $ 9,440 $ 11,797 $ 50,018 $ 81,842 $ 48,642 $ 25,943 $ 66,209 Capital Expenditures (6,336) (3,173) (4,
Slide 17: Reconciliation of Net Leverage Ratio
Appendix: Reconciliation of Net Leverage Ratio (dollar amount in thousands) Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Net Income $ 52,969 $ 57,026 $ 68,306 $ 79,113 $ 76,880 $ 80,457 $ 97,187 $ 92,215 $ 93,826 Interest expense, net 7,390 7,007 5,852 6,014 6,480 6,185 4,
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